Harnessing the Sun: Solar and Battery Incentives for Northern California in 2025
- Diamond Solar Solutions
- Apr 1
- 4 min read
As we've stepped into 2025, Northern California remains one of the best regions for solar energy adoption, thanks to its abundant sunshine and a robust lineup of incentives. Homeowners and businesses in areas like Sacramento, Placerville, and South Lake Tahoe can take advantage of federal tax credits, utility rebates, and innovative programs. Let’s break down the top solar and battery storage incentives available this year—including SMUD’s Virtual Power Plant program (VPP) and PG&E’s Battery Rebate Program - Self-Generation Incentive Program (SGIP) —and how they can help you save on energy costs.
The Federal Solar Tax Credit: A Major Savings Opportunity
The Residential Clean Energy Credit (aka the solar Investment Tax Credit or ITC) continues in 2025, offering a 30% tax credit on the total cost of a solar system, including equipment, labor, and permitting.
For example, if your solar system costs $25,000, you’ll receive a $7,500 credit, slashing your federal tax bill. This credit is available through 2032, making it a no-brainer to claim now as PG&E and SMUD rates continue to rise. Just ensure you’ve got enough tax liability to use it, or roll over the excess to next year. There is no timeline, so you can roll it or divide it over multiple tax seasons.
Self-Generation Incentive Program (SGIP): Power Up with Storage
With wildfires and Public Safety Power Shutoffs (PSPS) a reality in Northern California, the Self-Generation Incentive Program (SGIP) makes solar-plus-storage a lifeline. Administered by the California Public Utilities Commission, SGIP offers rebates for batteries in specific cases:
Medical Rate Plan: If you rely on medical equipment like a CPAP machine, nebulizer, or refrigerated medication, and you’re on PG&E’s medical rate plan, you may qualify.
High Fire-Risk Areas: Homeowners in wildfire-prone regions—such as El Dorado County—or those who experience frequent power outages can receive up to $1,000 per kWh in rebates—potentially covering the whole cost of battery storage.
Income-Based Eligibility: Households earning 80% or less of the area’s median income may also qualify.
For example, a 13.5 kWh battery, like the Tesla Powerwall 3, could score you $13,500, significantly reducing the cost of adding battery backup. Pair this with PG&E’s time-of-use rates, and you’re dodging peak prices by storing daytime solar.
SMUD’s Virtual Power Plant (VPP) Program: A New Frontier
Sacramento-area homeowners with Tesla Powerwall 3 batteries can join SMUD’s Virtual Power Plant (VPP) program, which runs through June 2025. This program allows SMUD to use stored battery energy when the grid needs support, rewarding participants with:
$5,000 per Powerwall 3 (up to $10,000 for two batteries)
There are also ongoing payments of $440 per battery per year for the 3 year VPP program
For a typical home with two batteries installed, this adds up to $12,640 in total rebates—a significant financial boost for battery adopters.
Net Energy Metering (NEM 3.0): High Buyback Credit Windows with PG&E
Under NEM 3.0 (Net Billing Tariff), PG&E customers can sell excess solar stored in their batteries back to the grid during peak demand hours—especially late afternoons in summer.
In September 2025, exporting energy between 6 PM and 8 PM could fetch over $4.00 per kWh thanks to air conditioning spikes and fading sunlight.
In July and August, rates often exceed $3.00 per kWh between 5 PM and 9 PM. Off-peak export rates drop significantly to 4–8 cents per kWh.
By storing solar energy during the day and selling it back at peak times, homeowners can accelerate their return on investment. For example, exporting 10 kWh at $3.50 per kWh earns $35 in just one evening—adding up quickly over time.
California’s Solar Property Tax Exclusion: A Hidden Gem
In a region where property values soar, California’s Active Solar Energy System Property Tax Exclusion keeps your tax bill steady. Solar installations don’t increase your assessed property value, so your taxes won’t spike after adding panels. Set to expire December 31, 2025 (though extensions to 2027 are being debated), this perk is a must-grab for 2025 installs. For Northern California homeowners, it’s a quiet bonus that boosts your home’s worth without the tax hit.
Why 2025 is the Year to Go Solar with Solar and Battery Incentives in Northern California
With rising electricity costs, frequent power outages, and generous financial incentives, Northern California is a prime location for solar and battery adoption.
SMUD’s VPP program offers substantial rebates for storage adopters.
PG&E’s NEM 3.0 buyback program allows strategic energy exports maximize your return on investment.
Federal tax credits, SGIP rebates, and property tax savings make solar more affordable than ever.
Whether you’re dodging PSPS - in Placerville, Cameron Park, El Dorado Hills, Granite Bay - or optimizing rates in Folsom, Elk Grove, or Sacramento, these incentives help cut costs and boost energy resilience.
Take the Next Step
Ready to go solar? Get a free, no-hassle quote to see how SMUD’s VPP rebate, PG&E’s SGIP rebate, tax credits, and other 2025 incentives might fit your set-up. With more rate increases on the way, and some incentives scheduled to wind down, now is the time to go solar!
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